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Sunday, March 29, 2015

What legal document does the executor have to submit to the court to close an estate?

Here is a question that I don't believe I've been asked before. That doesn't happen very often! This reader wants to know what an executor should file with the government to close an estate. Here is the question and my answer.

"What legal document does the executor have to submit to the court to close the estate’s will? Once the monies are dispersed, is there a final legal document that the executors have to give to the government? If so, does the government check to ensure that the financials being submitted are correct?"

There is no final document that asks the court to close an estate file. However, there are two documents that are usually prepared that indicate an estate is finished.

One is the Release that is signed by beneficiaries of the estate. The executor or his lawyer prepares the Release and gives it to the beneficiaries along with a full accounting of what the executor has done with the estate finances. Once the beneficiaries are happy with the accounting, they sign the Releases, give them back to the executor, and the executor pays them.

Not all executors file the Releases, but most do. It creates a court record of the fact that the beneficiaries were satisfied with the executor's work on the estate, and that the work on the estate is done.

Normally, this is the only check on the financials of the estate. There is no government department that goes through estate financials to ensure that they are correct. This is the job of the beneficiaries (which is why I find it so strange that so many executors get bent out of shape when beneficiaries ask for additional information). It's up to the beneficiaries to determine whether the house was sold at the right price, whether the assets were properly invested, whether the beneficiaries were paid the right amount, and a hundred other financial details.

Just to be accurate, I should mention that sometimes the Office of the Public Trustee reviews estate accounts, but that is not usually the case. They only get involved if they are representing the deceased or one of the beneficiaries.

The other document that signifies that an estate is complete is a Tax Clearance Certificate. This is prepared by Canada Revenue Agency (CRA) at the request of the executor or his accountant once all tax returns have been filed for the estate and all taxes have been paid. CRA will check estate documents and tax returns, but their focus is only on tax. They don't check to see whether you got the right price for the car, for example. Once they are satisfied that the estate has paid all taxes, they will send the Clearance Certificate to the executor.

The Clearance Certificate isn't filed at the court. The executor keeps the certificate in his own records as proof that he took care of the obligation to pay taxes.

10 comments:

  1. When the beneficiaries are minors and the executors were named as trustees, who do we account to?

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  2. I understand once a release is signed, a beneficiary cannot take action against an executor for monetary compensation in civil court. What if the executor committed a criminal offence? Would a release excuse the executor from being held accountable in criminal court?

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    Replies
    1. No, not necessarily. Criminal charges are brought by the crown on behalf of all of us and can be brought without the cooperation of any particular beneficiary. However, a defense lawyer would certainly be able to weaken the testimony of a witness who had already said in writing that the executor's actions were acceptable.

      Lynne

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    2. Thank you for your reply. I've been checking periodically for your response and can't thank you enough.

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  3. What happens when the person you've been court ordered to pay retribution to dies? This person was single, never married or inhabited, no children, an only child and both their parents are deceased. Can distant relatives (aunts, uncles and cousins) still claim the outstanding money owed?

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    Replies
    1. Distant relatives can't ask for the money unless one of them is either a) named as an executor in the deceased's will, or b) is appointed as administrator of the estate by the court. An aunt or cousin couldn't just call you up on their own without legal authority to act on behalf of the estate. When someone dies, all legally enforceable debts are still alive and owed to the estate.

      Lynne

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  4. If the beneficiaries are minors and the $ invested in RESPs, who are we accountable to and are the release forms signed by their parents? Once the minors are of legal age could they ask us for a detailed account of the Estate? Thank you for your time.

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  5. My dad has a property in his name only in Ontario n they have joint bank accounts in Toronto both my parents died n they made a trust in Nevada naming me as their beneficiary and my aunt as the executor of the trust do

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  6. Do I need to do a probate in canada ? I was told yes but I thought the whole idea of a living trust is that probate is not needed thank u for your input appreciate it

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  7. I m only son btw so their is no siblings rivalry thank u Lynn for your promontory reply btw I m 24 yrs old

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